Arvin's Adjusted Basis in the Gamma Partnership Is Zero at the Beginning

question 25

Multiple Choice

Arvin's adjusted basis in the Gamma Partnership is zero at the beginning of the current year.He has a $15,000 suspended loss from the previous year.During the current year,Gamma's operating income is $30,000.Arvin is a 40% partner,and he receives a distribution of $10,000 cash this year.If Arvin materially participates in Gamma's operations,how much of the suspended loss can he deduct?

• A)$ -0-
• B)$ 2,000
• C)$ 9,000
• D)$10,000
• E)$12,000

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Definitions:

Operations

Operations refer to the day-to-day activities involved in the running of a business for the purpose of producing value for the stakeholders.

Useful Life

The estimated time period that an asset is expected to be usable for the purpose it was acquired.

Maintenance

The act of keeping an asset in good condition through regular check-ups and repairs to ensure its proper function and prolong its life.